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WASHINGTON-Taxpayers are paying a high price to get their tax refunds back earlier. The cost of quick tax loans jumped almost $100 million last tax season, according to a recent study by Consumer Federation of America and the National Consumer Law Center. Refund Anticipation Loans cost borrowers anywhere between $34.95 and $89.95 in loans fees and another $40 for electronic filing fees for loans that only last about 10 days. The study found that the average refund of $1,980 bears an APR of 222.5%. Refund Anticipation Loan APRs can range from 97.4% to more than 2,000%. Few, if any, credit unions seem to be offering RALs, even at lower costs, according to credit union trade groups. “Quick tax loans cost consumers about $907 million, up almost $100 million from the year before,” CFA Consumer Protection Director Jean Ann Fox stated. “When you add in the $484 million in electronic filing fees and $400 million in other charges, consumers are paying almost $2 billion just to get their own money faster than the IRS sends it.” In 2001, about 12.1 million RALs were taken out, up from about 11 million in 2000. H&R Block alone made 5.2 million RALs in 2002. In addition, the report estimates that Household Bank, the largest RAL lender, generated over $225 million in RAL income in 2002. Working poor consumers who qualify for the Earned Income Tax Credit paid about $1.2 billion for commercial tax preparation, electronic filing, RAL fees and other charges to get immediate access to expected refunds, according to CFA and NCLC. The average EITC taxpayer who uses a commercial tax preparer and gets a RAL pays about $250. Of RAL customers, about 40% receive the EITC, the country’s largest anti-poverty program.

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